A Market for Environmentally Responsible Investment? Identifying Obstacles and Enablers of Commodification of Environmental Risks in the South African Investment Industry

This paper analyzes the views of South African investment organizations on the likelihood of commodification of environmental risks in their investment decision processes. It is based on an empirical qualitative survey of 22 investment organizations, which are signatories to the United Nations’ Principles for Responsible Investment.

We describe a range of issues, identified by the investment players interviewed, that are likely to prevent or accelerate the internalization of environmental risks in the South African investment industry. The chance that broader commodification of the South African investment industry will occur— beyond the growing but still small ranks of responsible investors—seems to be linked to realization of an adequate political framing. This means legislating standardized environmental disclosure by corporations and a long-term commitment by institutional investors to responsible investment philosophies. The tension between social developmental goals and environmental goals is seen as a major political obstacle at the national level.